Conditions

The section of an insurance policy that indicates the general rules or procedures that the insurer and insured agree to follow under the terms of the policy.
or
The rights and responsibilities of all parties of the contract.

Risk Pooling

Insurance

Risk Management

The process of identifying the areas of potential risk, using measurement techniques to determine the severity & frequency with which the risk may occur, evaluating & analyzing all costs involved with each type of risk, & establishing procedures for managing, controlling, retaining, & financing each risk.

Ownership

Changes

A required provision in a life insurance policy stating only the policy-owner has the right to request permitted changes to the policy, & only an authorized officer of the insurer can make changes to the policy. Producers cannot make any change to the policy.

Assessment insurers

Risk Purchasing or Purchasing groups

Unlike risk retention groups, risk purchasing group do not retain risk. Risk purchasing groups do not act as insurers, underwrite coverage nor require members to provide capital. (They buy group liability insurance from an outside insurer or from a risk retention group.)

Separate Account

Self insurers

Reciprocal or Interinsurance exchanges

-Unincorporated groups of individuals. Each individual member, called a subscriber, provides insurance for other members through indemnity contracts. (run by an attorney-in-fact)
-Each subscriber acts as both the insurer and the insured.
-A separate account is set up for each subscriber to which premiums are paid and losses are assessed.

Brokers

Solicitors

Payment of Claims

A required provision in a life insurance policy stating that once the insurer receives notice of the insured's death and receives the death certificate, the insurer must pay the claim within a certain number of days, usually 60.

Express authority

Apparent authority

It deals with the relationship between the insurer, the agent and the customer. It is a situation in which the insurer gives the customer reasonable belief that an agent has the power and authority to bind the principal even in cases where the agent does not have such authority.

Franchise marketing distribution

Direct response marketing

-Type of Mass Marketing that does not use agents.
-Includes insurance advertised and sold through television and radio advertisements, print sources found in newspapers and magazines, by mail and over the Internet.
-tend to have lower premiums and restricted policy benefits
-Policy applications are completed by the applicant and submitted to the insurer online or by mail.

Preferred

Paul v. Virginia

Court ruling that insurance transactions crossing states lines are not interstate commerce which meant that insurance transactions would be regulated on state and local levels, rather than on the federal level.

United States v. South-Eastern Underwriters Association

McCarran Ferguson Act or Public Law 15

A statute stating that while the federal government has the power to regulate the insurance industry, it may not exercise such rights if the insurance industry is effectively and adequately regulated on the state level.

Rights

Provisions

Investigative consumer reports

-They are reports that contain information about a consumer's character, general reputation, personal characteristics, or mode of living (not credit information).
-Are obtained through personal interviews with neighbors, friends, or associates of the consumer.

Gramm-Leach-Bliley Act or GLBA

Act which allows financial entities to merge and accommodate greater competition, including the ability to merge with banks, and either financial institution to perform the duties of both. Regardless, any entity acting as an insurer is regulated by its repective state insurance department.
-Two disclosures must be made to customers. The 1st disclosure must be made when the customer relationship is established. The 2nd disclosure must be made before disclosure of protected information.
-must provide customers with an update of privacy policies on an annual basis.

Face amount or Face Value

Consumer reports

Any written, oral, or other communication of information by a consumer reporting agency about a consumer's credit worthiness, character, general reputation, personal characteristics or mode of living which are used to determine a consumer's eligibility for credit, insurance, employment, or other authorized purposes.

Consumer reporting agencies

They compile and maintain credit information about consumers nationwide, and issue credit reports to third parties who have a valid business need for the information. Examples: MIB, Experian and Equifax.

Fair Credit Reporting Act

-The Act requires consumer reporting agencies to implement policies and procedures to preserve the confidentiality, accuracy, relevance, and appropriate utilization of consumer's private credit information.
- Investigative consumer reports cannot be performed unless the consumer has been notified in writing of the report within three days of when the report was initially requested.
-Consumers must be informed that they have the right to request additional information about the report; such information must be provided to consumers within five days if requested.

Legal Purpose

Competent Parties

All parties must be of legal competence, meaning they must be of legal age, mentally capable of understanding the terms, and not influenced by drugs or alcohol.
(1 of 4 elements required in a contract)

Consideration

An exchange of value between parties of the contract. The insured provides consideration in the statements on the application and payment of premium. The insurer provides consideration by promising to pay a covered loss.
(1 of 4 elements required in a contract)

Representations

Parol Evidence Rule

Rule that prevents parties to a contract from changing the meaning of a written contract by introducing oral or written statements made prior to the formation of the contract but are not part of the contract.

Agent Report

Variable Universal Life

-Universal life insurance with a separate account. The variable portion of premiums is invested in the insurer's separate account.
-Policies that earn a fluctuating rate of interest and do not guarantee a certain cash value. Policies have fixed level premiums and a guaranteed minimum death benefit.

Payment of Premiums

Payment of Claims

A required provision in a life insurance policy stating that once the insurer receives notice of the insured's death and receives the death certificate, the insurer must pay the claim within a certain number of days, usually 60.

Misstatement of Age or Sex

Legal Action

A required provision in a life insurance policy which places a limit on the period in which a claimant can file suit against an insurer, usually 60 days since the insurer received proof of loss and within 2 years from the date proof of loss was submitted to the insurer.

Insuring Clause

Incontestable Clause

A required provision in a life insurance policy which prevents the insurer from denying a claim or voiding a life insurance policy, except for nonpayment of premiums, after the policy has been in force for a certain number of years, usually 2.

Execution Clause

Entire Contract

A required provision in a life insurance policy stating that the insurance policy itself (including any riders and endorsements/amendments) and the application, if attached to the policy, comprise the complete contract between all parties.

Absolute Assignment

Refund Life

Life income settlement option which pays the beneficiary periodic income for his entire life. If the beneficiary dies before the policy proceeds have been paid out entirely, then a second beneficiary receives the payments until the principal reaches zero.